UAE Taxes Explained: What New Residents Need to Know

Moving to the United Arab Emirates (UAE) is exciting, not only for its lifestyle, safety, and career opportunities, but also for its favorable tax system. Unlike many countries where income tax eats into your salary, the UAE offers a unique environment where residents enjoy minimal direct taxation. Still, “tax-free” doesn’t mean you can ignore financial rules. From value-added tax (VAT) to the recently introduced corporate tax and the requirements for obtaining a Tax Residency Certificate, newcomers need to understand how the system works to avoid surprises. Let GI Movers UAE break down what new residents should know about UAE taxes and how to make the most of living in one of the world’s most tax-friendly destinations.

A Tax-Friendly Environment

One of the most compelling reasons many people choose to relocate to the UAE is the absence of personal income UAE taxes. This feature applies to both Emirati citizens and expats alike. Individuals do not pay taxes on their salaries, wages, or investments at the federal or Emirate level. So, if you see this as the greatest benefit of relocating to the UAE, start planning your move with the best movers and packers in Dubai.

Understanding UAE Taxes Residency

To benefit from the UAE’s favorable tax regime and access double taxation agreements (DTAs), it’s essential to establish tax residency. Since March 1, 2023, the UAE defines tax residency for individuals based on one of three criteria:

1. Having your main home and financial interests in the UAE;
2. Being physically present for 183 days or more in a 12-month period; or being present at least 90 days
3. Holding a valid UAE residence permit along with a permanent home or employment/business ties.

Territorial Tax System: What’s Taxable

The UAE operates a territorial taxation system, meaning only income earned within the country is taxed. Foreign-source income is generally not subject to taxation in the UAE, reinforcing its appeal for global professionals and investors. So, search for the best for digital nomands in Dubai and seize this no-taxation opportunity.

Value-Added Tax (VAT): A Small Bite

The primary tax individuals will encounter in daily life is VAT, introduced on January 1, 2018. The standard rate is 5%, levied on most goods and services, though essentials like healthcare and education are often exempt or zero-rated.

Excise Tax: Targeting Harmful Products

Besides VAT, the UAE imposes excise taxes on goods deemed harmful to human health or the environment—such as 100% on tobacco and energy drinks, and 50% on carbonated and sweetened beverages. So, if you deal with goods with excise, study UAE taxes carefully before deciding to do business in this field.

Corporate Tax: A New but Limited Burden

As of June 1, 2023, the UAE introduced a 9% federal corporate tax on business profits exceeding AED 375,000 (approximately USD 102,000). Profits below that threshold remain untaxed.

Free Zone Incentives: Tax-Friendly Business Hubs

Businesses operating in designated free zones in the UAE may benefit from 0% corporate tax, especially when qualifying under conditions such as wholesale distribution from the free zone, along with exemptions from personal taxes and full repatriation of profits and capital.

Property Fees, Not Property Tax

While the UAE doesn’t levy property taxes as seen elsewhere, property transaction fees exist—for example, a 4% transfer fee in places like Dubai. However, there is no ongoing property tax or taxation on rental income. Yet.

No Capital Gains, Inheritance, or Wealth Tax

The UAE does not impose capital gains tax, inheritance tax, or net wealth tax. This makes it particularly attractive for long-term asset planning and wealth preservation. For high-net-worth individuals and families, this means investments can grow without the burden of additional levies when selling assets or transferring wealth to heirs. Expats also find reassurance in knowing that their estates will not face heavy taxation, allowing them to pass on assets seamlessly. Combined with the country’s strong financial infrastructure and growing network of double taxation agreements, the UAE stands out as a global hub for wealth management and succession planning.

VAT Refunds for Tourists

Although not a primary concern for new residents, it’s worth noting that tourists departing with eligible purchases can claim VAT refunds, provided the purchase meets criteria such as a minimum value and being unused at the time of exit.

Tax Residency Certificate (TRC) and DTAs

Newcomers can obtain a Tax Residency Certificate (TRC) from the Federal Tax Authority once they meet residency criteria. This certificate enables them to claim benefits under DTAs—offering protection against double taxation when earning income from abroad.

Navigating UAE Taxes: Obligations from Home

For new residents from countries like the US, it’s crucial to remember that your home country may still tax your worldwide income. US citizens and green-card holders, for example, must continue to file US taxes even while living in the UAE.

Ranked Among the World’s Most Tax-Friendly Cities

Reflecting its fiscal policies, Abu Dhabi and Dubai were ranked among the world’s most tax-friendly cities in 2025, highlighting the national strategy to attract expatriates, investors, and international firms.

Final Thoughts for New Residents

As a newcomer to the UAE, you’re entering one of the world’s most tax-efficient jurisdictions. You’ll benefit from no income, capital gains, inheritance, or wealth taxes, along with competitive indirect taxes like VAT (5%) and excise duties. Businesses enjoy low or zero corporate tax, especially within free zones. However, securing your tax residency status, obtaining a TRC, and understanding how UAE taxation interacts with your home country’s obligations is essential to maximizing benefits and maintaining compliance. And now that you know almost all about the UAE taxes, you can plan your home or office move simultaneously with GI Movers UAE at your disposal.

References:

UAE announces new tax residency criteria | DLA Piper. (2023). DLA Piper. https://www.dlapiper.com/en/insights/publications/gulf-tax-insights/gulf-tax-insights—april-2023/uae-announces-new-tax-residency-criteria

leonorcicio. (2024, December 9). Taxes in UAE: The Ultimate Guide for Expats in 2025. Global Citizen Solutions. https://www.globalcitizensolutions.com/taxes-in-uae/

Understanding Taxes in Dubai for US Expats | US Expat Tax Service. (n.d.). Www.taxesforexpats.com. https://www.taxesforexpats.com/country-guides/uae/us-tax-preparation-in-dubai-uae.html